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IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
MANOJ KUMAR GUPTA, YOGENDRA KUMAR SRIVASTAVA, JJ.
M/S Nsoft (India) Services Pvt. Ltd. and Another - Petitioners
Versus
Purvanchal Vidhyut Vitaran Nigam Ltd. and Another - Respondents
Writ - C No. 18052 of 2022 Connected with Writ - C No. 18053 of 2022
Decided On : 02-09-2022
Show Cause Notice - Blacklisting - [Siemens Ltd. vs. State of Maharashtra & Others, (2006) 12 SCC 33, Oryx Fisheries Pvt. Ltd vs. Union of India & Others, (2010) 13 SCC 427, Gorkha Security Services vs. Government (NCT of Delhi) & Others, (2014) 9 SCC 105, Union of India and another Vs. Vicco Laboratories, (2007) 13 SCC 270, Commissioner of Central Excise, Haldia Vs. M/S. Krishna Wax (P) Ltd., (2020) 12 SCC 572, Malladi Drugs and Pharma Ltd. Vs. Union of India, (2020) 12 SCC 808, Union of India and others Vs. Coastal Container Transporters Association and others, (2019) 20 SCC 446, UMC Technologies Private Ltd. Vs. Food Corporation of India and another, (2021) 2 SCC 551, M/s Erusian Equipment & Chemicals Ltd. Vs. State of West Bengal and another, (1975) 1 SCC 70, Raghunath Thakur Vs. State of Bihar & Ors., (1989) 1 SCC 229, Gronsons Pharmaceuticals (P) Ltd. & Anr. Vs. State of Uttar Pradesh & Ors., AIR 2001 SC 3707, M/s Kulja Industries Limited Vs. Chief General Manager, W.T. Project, BSNL & Ors., (2014) 14 SCC 731, M/s Baba Traders Vs. State of U.P. and others, 2019 (11) ADJ 516 (DB), Amit Kumar Vs. State of U.P. and another, 2020 (10) ADJ 264 (DB)] - The court discussed the principles of natural justice and the necessity of issuing a show cause notice before passing an order of blacklisting. It emphasized the importance of specifying the grounds and proposed action in the notice to provide the noticee with an adequate opportunity to rebut the allegations and show cause against the proposed blacklisting. The court held that the challenge to the show cause notices was premature and that the petitioners should first submit their response to the notices, after which the respondent authority would be expected to conclude the proceedings and pass reasoned and speaking orders.
Fact of the Case:
The two writ petitions arose from notices directing the petitioners to show cause in respect of the proposed action of blacklisting/debarment. The petitioners challenged the notices, claiming that they were issued with premeditation and malice, founded on incorrect and incomplete facts, and indicative of the respondent authority's pre-determined decision to blacklist them. The respondents argued that the notices were issued in accordance with the liberty granted by the court in earlier judgments.
Finding of the Court:
The court found that the challenge to the show cause notices was premature and that the petitioners should first submit their response to the notices, after which the respondent authority would be expected to conclude the proceedings and pass reasoned and speaking orders.
Issues: The issues involved the validity of the show cause notices, the necessity of specifying the grounds and proposed action in the notice, and the premature challenge raised by the petitioners.
Ratio Decidendi: The court emphasized the importance of issuing a show cause notice before passing an order of blacklisting, specifying the grounds and proposed action to provide the noticee with an adequate opportunity to rebut the allegations and show cause against the proposed blacklisting. The court held that the challenge to the show cause notices was premature and that the petitioners should first submit their response to the notices, after which the respondent authority would be expected to conclude the proceedings and pass reasoned and speaking orders.
Final Decision: The court held that the challenge to the show cause notices was premature and that the petitioners should first submit their response to the notices, after which the respondent authority would be expected to conclude the proceedings and pass reasoned and speaking orders.
JUDGMENT :
Yogendra Kumar Srivastava, J.
1. The two writ petitions arise out of similar set of facts and seek to raise challenge to notices bearing date 18.6.2022 directing the petitioners to show cause in respect of the proposed action of blacklisting/debarment. Accordingly, with the consent of the parties, the two petitions have been heard and are being disposed of by means of a common order.
2. Heard Sri Prashant Chandra, learned Senior Counsel assisted by Sri Kartikeya Dubey and Sri Ujjawal Satsangi for the petitioners and Sri Udit Chandra, learned counsel for the respondents.
3. Pleadings have been exchanged between the parties in both the petitions.
4. At the very outset, it would be relevant to take notice of the fact that the writ petitioner in Writ C No. 18053 of 2022 (M/S Bcits Pvt. Ltd vs. Purvanchal Vidhyut Vitaran Nigam Ltd. And Another) had approached this Court earlier in Writ C No. 15363 of 2022 (M/s Bcits Pvt. Ltd. vs. Purvanchal Vidhyut Vitaran Nigam Ltd. And Another) seeking to challenge notice dated 18.5.2022 whereby the petitioner had been directed to show cause in respect of a proposed action of blacklisting/debarment.
5. The writ court allowed the writ petition by means of a judgement dated 26.5.2022 taking into consideration the fact that in the aforestated notice the authority concerned had already recorded its conclusion with regard to explanation furnished by the petitioner earlier and had found the same to be unsatisfactory. The Court held that since the respondent authority had already expressed its mind, the exercise which was to follow would be an empty formality. Accordingly, the notice was quashed leaving it open to the respondent corporation to issue a fresh notice in accordance with law, if so advised.
6. Against a similarly worded notice bearing same date i.e. 18.5.2022, the petitioner in Writ C No. 18052 of 2022 (M/S Nsoft (India) Services Pvt. Ltd. vs. Purvanchal Vidyut Vitaran And Another) had also preferred an earlier petition being Writ C No. 17169 of 2022 (M/s Nsoft India Services vs. Purvanchal Vidyut Vitaran And Another) and following the judgement in Writ C No. 15363 of 2022 (M/s Bcits Pvt. Ltd. vs. Purvanchal Vidhyut Vitaran Nigam Ltd. And Another), the writ petition was disposed of in the same terms by means of a judgment dated 16.6.2022.
7. It is pursuant to the judgments in the earlier round of litigation, referred to above, that the respondent no.2 issued notices dated 18.6.2022 bearing Reference No. 162/PuVVNL(Varanasi)/Commercial/Billing and Reference No. 161/PuVVNL(Varanasi)/Commercial/Billing respectively, against the petitioners in the two writ petitions, in terms of which they were directed to show cause as to why in the light of the facts stated in the notices, the petitioner firms be not blacklisted/debarred for a period of two years.
8. Challenging the aforesaid notices, the present petitions have been filed.
9. Counsel appearing for the respondents has raised a preliminary objection by submitting that the notices dated 18.6.2022 which are sought to be challenged only direct the petitioners to answer the charges which have been levelled against the petitioner firms with a further mention as to why it should not be blacklisted for a period of two years and the decision whether to blacklist the petitioners or not would be taken only after objection to the show cause notices have been submitted by the petitioners and in view thereof, the present petitions are premature and not maintainable.
10. Learned Senior Counsel appearing for the petitioners while assailing the show cause notices dated 18.6.2022 issued by the respondent no.2, submits as under:
10.1 The notices dated 18.6.2022 though stated to be for the purpose of giving the petitioners a show cause, is infact in the nature of an order which has been issued with premeditation with malice writ large in issuing the said notices.
10.2 The notices are founded on incorrect and incomplete facts which have been selectively stated to pre
The necessity of issuing a show cause notice before passing an order of blacklisting, specifying the grounds and proposed action in the notice to provide the noticee with an adequate opportunity to r....
A show cause notice for blacklisting must be based on reasonable grounds and cannot be issued merely for breach of contract without substantial evidence of misconduct.
The necessity of a valid, particularised and unambiguous show-cause notice before passing an order of blacklisting or debarment.
Natural justice requires that prior notice be given before penalties such as blacklisting; however, if adequate opportunity and communication are established, decisions can stand.
The main legal point established in the judgment is that a valid, particularized, and unambiguous show-cause notice is essential for decisions pertaining to blacklisting, and a failure to do so would....
Issuing a show cause notice with premeditation and expressing a predetermined mind renders the notice invalid.
The main legal point established in the judgment is the requirement for a clear mention of the proposed blacklisting action in the show cause notice, as well as the need to adhere to principles of na....
A party cannot be blacklisted without a clear and adequate show cause notice, violating principles of natural justice, leading to severe consequences.
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